Service trade pact to aid expansion abroad: finance sector

TAIPEI, Taiwan -- As political standoff over the service trade pact escalates, financial industry leaders collectively expressed support for the pact while saying the business accord will lend support to securities and banking businesses in China.

The Central News Agency (CNA) on Thursday reported that Cathay Financial (國泰金控) President Lee Chang-ken (李長庚) said a day earlier his company hopes the trade pact will be passed as soon as possible, as the agreement will help the local financial sector to extend its reach out of Taiwan, where the financial market is saturated.

Lee said the trade agreement is expected to lend support to Taiwan's securities and banking businesses, which are eager to set up footholds in the huge China market.

Chou Po-chiao (周伯蕉), president of First Commercial Bank (第一銀行) under First Financial Holding Co. (第一金控), agreed, saying that banks from elsewhere such as Singapore, the United States and Europe have set up branches in China's rural areas, while Taiwanese counterparts have lagged behind.

Chou said that only if the trade-in-services agreement is passed will Taiwan's banks be able to speed up the pace of penetration into the China market. First Bank aims to set up outlets in villages in Henan province.

"There have been concerns that if the service trade agreement is blocked, Taiwan's ongoing talks with China goods trade agreement will be impacted, which could hurt cross-Taiwan Strait economic exchanges," Grand Fortune Securities analyst Chen Wei-tai said.

"I am not optimistic that the political standoff will be resolved anytime soon," Chen added.

The local financial sector extended losses from a session earlier Thursday amid rising uncertainty over the fate of a trade-in-services agreement with China, reported CNA.

Investors dumped financial stocks at a time when protesters, mostly students skeptical of the trade pact signed by Taiwan and China in June 2013, occupied the Legislative Yuan. The investors fear that a delay in the implementation of the trade agreement will hurt financial firms' profitability, the dealers said.

"Many investors are afraid that if the political standoff escalates, the implementation of the trade agreement could be postponed indefinitely, so they preferred to take the money and run for the moment to avoid further losses down the road," Chen said.